Innovation ISA ‘to boost P2P market by a third’
The innovative finance ISA, which was announced in the 2015 Summer Budget, will make savers using peer-to-peer lending platforms eligible for tax-free interest from April 2016.
The findings, commissioned by peer-to-peer lender ThinCats, indicate the market could expand by as much as 33 per cent, as investors seek to use the tax advantages ISAs offer. Currently, peer-to-peer is the preserve of a just six per cent of more experienced investors.
Some 55 per cent of current investors are attracted by the asset class’ returns, but the perceived risks involved remain a key barrier for entry (43%), as do worries around the relative early stage of the industry and the partly unproven track record is a hesitation for a quarter (26%).
The study also suggests independent financial advisers are increasingly recognising the potential of peer-to-peer, with 23 per cent of current investors stating their independent financial adviser has recommended peer-to-peer to them.
Kevin Caley, managing director of ThinCats, said: “Early adopters are still very much core to our business, but the government’s changes will open up peer-to-peer to a whole new audience. It is the industry’s job to manage the current concerns and communicate the huge benefits and security available for peer to peer investment.”